31 of $6.1 million ($0.46 per common share) a seven percent increase over the same period for 1993.

End of year profits totalled $23.9 million or $1.80 per common share, an increase of 16 percent over 1993.

The company said the results were affected by an unusual tax benefit in 1993 and a higher level of realised investment losses in 1994, which amounted to $600,000, after tax, or $0.04 per common share.

Chairman and CEO, Mr. Robert Mulderig, and president, Mr. John Kessock Jr., said: "The 1994 operating results were excellent, with the company achieving a 21 percent increase in risk management fee income and a 24 percent increase in operating income (excluding the effect of a $0.06 per common share extraordinary tax benefit in 1993) despite a more difficult market for the company's `alternative market' services.'' The company's assets at December 31, 1994 exceeded $1 billion dollars, a significant milestone for a company purchased just ten years ago from Aneco Re for about $3 million, with assets at that time of less than $10 million.

For the year to December 31, the assets grew more than 17 percent from $859 million to $1,006,000,000 and shareholders' equity went from $114 million to $122 million.

Risk management fees increased 20 percent to $13.2 million for the fourth quarter and increased 21 percent to $50 million for the full year. Profit margins on such fees remained steady at 45 percent and 46 percent, respectively.

Operating income for the fourth quarter increased by 17 percent to $6.4 million or $0.48 per common share and 24 percent to $24.5 million or $1.84 per common share for the full 1994 year (excluding the effect of an unusual tax benefit from the exercise of employee stock options which added an estimated $800,000 or six cents per common share to the 1993 results).

The company's policy issuing subsidiary, Legion Insurance Company, added 14 new programmes during the fourth quarter for a total of 66 new programmes for the year, two better than in 1993.

Legion's renewal rate for all of 1994 also showed improvement over the 1993 renewal rate, increasing to 84 percent from 78 percent in 1993.

In California, the company's sales and renewals were affected by heavy competition caused by workers' compensation reform and the market's anticipation of open rating of workers' compensation which became effective January 1.

Legion added five new California programmes during 1994 compared to nine in 1993 and maintained a renewal rate of 78 percent, compared to 86 percent in 1993.

Gross premiums written increased 22 percent to $305.3 million for the year compared with $251.3 million in 1993, in line with the company's increase in risk management fees as a result of new business combined with a relatively high renewal rate.

The company's effective tax rate for 1994 was 24.8 percent compared to 23.5 percent the year before. The 1993 year included an unusual tax benefit related to employee stock options which reduced the effective rate by an estimated 4.4 percent. The 1994 tax rate was reduced by an increase in the company's holdings of tax exempt municipal securities.

Investment income for the year amounted to $11.4 million, a 20 percent increase over the 1993 amount of $9.5 million. Fourth quarter 1994 investment income increased 21 percent to three million dollars as compared to $2.5 million in the 1993 fourth quarter.

The 1994 investment returns resulted from an increase in interest rates combined with an increase in invested assets offset by an increasing investment in tax free municipal securities by Legion.

Operating expenses amounted to $7.3 million for the fourth quarter and $26.8 million for the year ended December 31, increases of 23 and 21 percent respectively over the same periods in 1993.

The company last month completed its acquisition of Shoreline Mutual Management (Bermuda) Ltd., manager of Shoreline Mutual (Bermuda) Ltd., the mutual insurance company set up to issue guaranties to the United States Coast Guard.

The company will earn risk management fees for providing certain underwriting, accounting and administrative services to Shoreline but does not participate in any way in the underwriting risks.

Mr. Mulderig said: "We would expect it to be a very substantial captive management client. Shoreline is doing very well and we would expect it to add significantly to our risk management fees earned from captive management.

"In the overall scheme of things, Mutual Risk has become quite large.

Almost no matter what the success of Shoreline will be, it won't be a substantially major contributor to Mutual Risk.'' He said Shoreline might contribute $1 million in fees to the company, which last year received a total of $50 million in fees.